A sustainable Universal Service Fund is critical to accelerating broadband deployment to consumers and to small and large businesses in high cost areas across the nation.
The Telecommunications Act of 1996 sought to provide universal service to all Americans, with particular focus on rural, insular, high-cost and low-income areas, and certain social institutions such as libraries, schools, and rural health care providers. The Act also established a Universal Service Fund, designed to support the Eligible Telecommunications Carriers (ETCs) who provide support to these targeted areas.
The Fund’s sustainability has been threatened by a combination of increased requests from ETCs and decreased contributions to the Fund itself. The fund continues to be a vital resource for providing broadband service for millions of consumers living in hard-to-reach rural areas.
The FCC first outlined proposals for reforming Universal Service in the 2010 National Broadband Plan. This plan's stated goal was to “connect all corners of the nation while transforming the economy and society with the communications network of the future – robust, affordable Internet.” The plan also specifically mentions universal service, saying it would "bring affordable broadband to rural communities, schools, libraries, and vulnerable populations by transitioning existing Universal Service Fund support from yesterday’s analog technologies to tomorrow’s digital infrastructure."
The FCC’s October 2011 order redesigned the Universal Service Fund to help carriers bring broadband service to areas that are too expensive to serve without financial help because of rugged terrain or sparse population. Among many changes, the Order transitions the existing Fund into a Connect America Fund, intended to extend broadband infrastructure to the millions of Americans who currently have no access to broadband.
USTelecom believes a sustainable Universal Service Fund is critical to protecting basic, affordable service for all Americans. We have advocated before the FCC and Congress and have been instrumental in enacting reform.
USTelecom identified these key principles for restoring the long-term health of the Fund:
- Broaden the base of contributors to include all providers
- Use competitive bidding to reduce the number of mobile providers in an area receiving support
- Better target support to rural areas served by larger providers
- Reduce support to providers with low subscriber rates
- Adopt changes to restrain fund growth
- Apply carrier of last resort obligations uniformly
This sweeping reform will affect all telecom carriers. For details on the specific impacts on rate-of-return or price cap carriers, read USTelecom’s Crossroads Express in-Depth.
- FCC July 2013 Order
- White Paper: An Economic Analysis of the FCC’s Modification to the High-Cost Loop Support Mechanism (Dr. Simon Wilkie)
- FCC October 2011 Order